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manner in which the taxpayer carries on the activity; (2) the
expertise of the taxpayer or his or her advisers; (3) the time
and effort the taxpayer expended in carrying on the activity;
(4) the expectation that assets used in the activity may
appreciate in value; (5) the taxpayer’s success in carrying on
other activities; (6) the taxpayer’s history of income or loss
with respect to the activity; (7) the amount of occasional
profits, if any, which are earned; (8) the taxpayer’s financial
status; and (9) whether elements of personal pleasure or
recreation are involved. Sec. 1.183-2(b), Income Tax Regs; see
Golanty v. Commissioner, supra.
As discussed below, on the basis of all the evidence in the
record, we conclude that Tony had no good faith expectation of
making a profit from the stock car activity.
1. Manner of Carrying on Activity
Tony kept no regular books and records of his stock car
activity. He had no business plan and made no predictions of
income or expenses. He carried no insurance on his stock car.
The record does not establish whether he had resources available
to repair or replace the stock car.
To turn a profit on his stock car activity, Tony needed
substantial funds from sponsors, since a significant share of any
prize winnings would go to the driver. Tony hoped to secure
large sponsorships. His testimony indicates that because he
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